A summer of subsidy control: Roundup of recent developments in the UK's subsidy control regime

A trickle of gradual developments in the UK’s post-Brexit subsidy control regime has turned into something of a summer downpour, with the first decision handed down by the Court of Appeal, two new decisions from the Competition Appeal Tribunal (“CAT”) and a report from the Competition and Markets Authority (“CMA”).

Each of these new developments adds to a sense, which we covered most recently in our post on the CAT’s decision in Bristol Airport v Welsh Ministers, that the UK’s subsidy control regime applies a very light touch to scrutinising the subsidy decisions of public authorities, and emphasises the extent to which the regime is intended to (and does) operate largely on a self-policing basis.

Weis v Greater Manchester Combined Authority (Court of Appeal)

This case was the appeal of the CAT’s decision in July 2025 that a series of loans by GMCA to a property developer was not a subsidy and was not therefore subject to the obligations set out in the Subsidy Control Act 2022 (the “SCA”). The CAT accepted GMCA’s argument that it had adopted a commercial approach to deciding whether to lend to the developer and the appropriate interest rate to apply to that lending, and that it was therefore given on a “commercial market operator” basis (i.e. it did not confer an advantage over what would be available to the developer from market sources and was not therefore a subsidy), even though GMCA had not actually carried out any sort of independent assessment or benchmarking analysis when determining the interest rate that it would apply.

The Court of Appeal upheld the decision of the CAT. First it found that the CAT had been correct when it decided that the question of whether the loans constituted a subsidy was a question that the CAT had to determine for itself in order to decide whether it had jurisdiction – it was not a matter for the GMCA to decide subject to its conclusions then being scrutinised by the CAT against public law standards of decision making. Second, it held that the CAT had been correct when it decided that the CAT itself had to answer that question by reference to all of the information in front of it (the CAT) and not only by reference to what had been in front of the authority at the time it decided to give the loans. These two elements were important because a significant part of the claimant’s case was that GMCA had adopted a flawed process when it decided that the loans did not constitute a subsidy and did not have the necessary evidence that they represented “market” terms.

By deciding that the question of whether something constitutes a subsidy is a question to be considered and answered by the CAT itself, the Court of Appeal’s judgment makes it possible for a “CMO” decision (that is, a decision that assistance has been given on market terms rather than being a subsidy) to be defended retrospectively on grounds that the public authority did not consider at the time of providing that assistance. This is simply the latest departure from EU State aid law, where the equivalent “market economy operator principle” can only be invoked at the time that assistance is given and not after the fact (see the Notice on the Notion of Aid at [78]-[79]).

BEK Developments Ltd and Others v Durham County Council (CAT)

This case concerned a number of proposed or distributed grants by Durham County Council (“DCC”) in connection with regeneration projects in Bishop Auckland. It was originally brought under the Competition Act 1998 (which one of us reviewed here for Subsidy Control Insider) but subsequently reformulated as a more conventional claim under the SCA. The claim only proceeded with regard to the grants that had been proposed but not yet subject to a final decision (presumably because challenges to the other grants were time-barred).

The CAT struck out both claims on the basis that those subsidies were not yet the subject of a final “subsidy decision” that was subject to review under the SCA, because they were only at proposal stage and DCC had not even yet obtained the required funding to proceed with them. The CAT refused to allow a claim to be brought and then stayed in relation to such proposed subsidies on the basis that this would not be in keeping with the intention of the SCA when establishing a regime of ex post review of subsidy decisions actually taken.

This judgment underlines the distinction between when a subsidy decision is taken and when a subsidy is given, which are two separate concepts under the SCA that trigger different obligations, rights and limitation periods, and the importance of bringing claims at the right time.

Zenobē Energy Limited v Gas and Electricity Markets Authority (CAT)

This case – which we previously wrote about here – concerned a scheme established by GEMA to create a “cap and floor” arrangement under which participating projects will be guaranteed a minimum “floor” level of revenue, with top-up payments made by the publicly-owned National Energy System Operator (NESO) out of levies on customers where commercial prices fall below that floor, in exchange for which they will be required to return excess revenues to customers where these exceed the “cap”. GEMA prepared the scheme in anticipation of being required to do so by the Planning and Infrastructure Act 2025 (and specifically by new provisions inserted into the Electricity Act 1989).

Zenobe alleged that this constituted a subsidy scheme, and that (because GEMA did not recognise it as such) GEMA failed to comply with its obligations under the SCA to carry out a subsidy control principles assessment (including against the energy and environment principles), to make the scheme only if satisfied it was consistent with both sets of principles, and to refer the assessment to the CMA as a scheme of particular interest.

The CAT held that certain key parts of the scheme would only be determined once the new provisions in the 1989 Act were in force and so the preparatory steps taken by GEMA did not themselves count as subsidy decisions and were not subject to review. It further held that the true subsidy decision was taken pursuant to the 1989 Act, and therefore that it had no jurisdiction to review that because of the operation of s.78 and Schedule 3 of the Act which excludes review of decisions made pursuant to primary legislation.

More appeals coming up

The decision of the CAT in Bristol Airport v Welsh Ministers and that of the Court of Session in Allanvale v South Ayrshire Council (both of which we reviewed here) are both, we understand, currently on appeal to the Court of Appeal and Inner House respectively, so another exciting season of subsidy control may lie ahead.

The CMA Report on the effectiveness of the subsidy control regime

On 25 June 2026 the CMA published its report on the effectiveness of the subsidy control regime. Put briefly the CMA concluded that the regime is “overall, operating effectively” but that it is “too soon to conclude whether the arrangements for challenging subsidy decisions are operating effectively” (the growing list of unsuccessful claimants may view things differently).

The CMA noted particular concerns with the functioning of the subsidy control database and whether it was operating effectively as the key mechanism for ensuring transparency in how public authorities handle subsidies. The CMA also recommended that the Department for Business and Trade develop further guidance for public authorities – particularly on the streamlined routes – in order to help public authorities to become more confident and comfortable navigating the flexibility and discretion available to them under the Act.

Concluding thoughts

It is difficult to criticise too strongly the logic of any of the decisions we have reviewed here, any of the others that we have previously reviewed, or indeed the CMA’s own reporting (whether on referred subsidies or on the effectiveness of the regime). All are consistent with a regime which is designed to empower and enable (in the CMA’s words) public authorities to give subsidies. The regime is deliberately light touch, it is deliberately self-policing, and it is deliberately designed to allow public authorities to give subsidies that they think are appropriate subject principally to democratic (rather than judicial) accountability. It is not the fault of the courts that Parliament set a judicial review standard for challenges to subsidies, nor the fault of the CMA that Parliament set its role as advising on subsidy control principles assessments rather than policing them. But democratic safeguards on the use of public money are unlikely to work when the positive effects will be felt by businesses and individuals within the granting authority’s area and the negative effects may well be felt primarily by businesses outside its area.

Ultimately the biggest issue for the new regime is that until a public authority loses a challenge, with the reputational hit that follows, there is very little reason for other public authorities to develop a sufficiently in-depth understanding of what subsidies are, and the limitations on them. The biggest failure of the regime so far is, of course, the sheer volume of subsidies being given without anybody knowing that they are subsidies in the first place. All of this creates a significant risk for authorities because a failure to engage with the regime makes it only more likely that they will be the first to lose a challenge under it.

If you would like to discuss how these decisions affect your organisation please contact Jamie Dunne, Charles Livingstone, or your usual Brodies contact.